Proxy question for Texas non-profit HOA

Hi, everyone. I have a question regarding how our Texas non-profit corporation HOA may conduct election of Directors. I am a current Director and the Secretary/Treasurer of our HOA. Our current president resigned last week, leaving myself and the v.p. still on the Board. Both the v.p. and I are not seeking re-election and our Annual Meeting in which we will elect 3 new Directors is set for February 11, 2012.

We have previously used an open proxy which simply designates an individual to act on all matters of the person signing the proxy. We have several out-of-state owners who are forced to designate their proxy and are unable to direct the proxies on how they would want to vote on issues including the election of Directors.

Does anyone have any suggestions on how I could produce a more detailed proxy based on the following verbiage taken from our by-laws (below paragraph) and the Texas Business Code section (also below) which our non-profit falls under? Any attorney who wants to weigh in on this would also be appreciated...

Our by-laws state:
Arricle V: ELECTION OF DIRECTORS
Section 5.01. Nomination. Nomination for election to the Board of Directors shall be made by a Nominating Commiuee.
Nominarions may also be made from the floor at the annual meeting. The Nominating Committee shall consist of a Chairman, who
shail be a member of the Board of Directors, and two or more members of the Association. The Nominating Committee shall be
appointed by the Board of Directors prior to each annual meeting of the members and such appointment shall be announced to the
membership at least 30 days prior to the annual meeting. The Nominating Committee shall made as many nominations for election
to the Board of Directors as it shall in is discretion determine, but not less than the number of vacancies that are to be filled.
Members or non-members of the Association may be nominated for the Board of Directon.
Section 5.02. Election. Election to the Board of Direcors shall be by secret written ballot. At such election the members or
their proxies may cast, in respect to each vacancy, as many votes as they are entitled to exercise under the provisions of the
Declaration. The persons receiving the largest number of votes shall be elected. Cumulative voting is not permined.

The Texas Business Code section states:
Sec.22.160. VOTING OF MEMBERS. (a) Each member of a
corporation, regardless of class, is entitled to one vote on each
matter submitted to a vote of the corporation ’s members, except to
the extent that the voting rights of members of a class are limited,
enlarged, or denied by the certificate of formation or bylaws of the
corporation.
(b)A member may vote in person or, unless otherwise
provided by the certificate of formation or bylaws, by proxy
executed in writing by the member or the member ’s attorney-in-fact.
(c)Unless otherwise provided by the proxy, a proxy is
revocable and expires 11 months after the date of its execution. A
proxy may not be irrevocable for longer than 11 months.
(d)If authorized by the certificate of formation or bylaws
of the corporation, a member vote on any matter may be conducted by
mail, by facsimile transmission, by electronic message, or by any
combination of those methods.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Thanks, Tim.

In your opinion, does this proxy conflict with our By-laws Section 5.02 that "election to the Board of Directors shall be by secret written ballot"?

Lauren,

We have the same language and directed proxies have been no problem.

As John said, a proxy is not a ballot.

A directed proxy is similar to a ballot as it has all the same information the ballot will have. However, they are two different functions. A ballot is the casting of votes. A directed proxy only directs the proxy representative how to fill out the ballot.

Tim

So, in that scenario, what if the ballots actually cast do not match the proxy designations that owners turn in?

The election is void and the vote must be done over otherwise, if a member so chooses, the election could be challenged in court.

My Association put the following safeguards in place:

1. Proxy Representative checks in and provides a directed proxy.
2. Secretary/Election committee verifies the proxy and provides a ballot
3. Proxy Representative fills out the ballot for all sections that were directed (not for any sections that allows the representative vote as they believe is best).
NOTE: THIS IS RARE AS MOST DIRECTED PROXY's DESIGNATE THE BOARD AS THE REPRESENTATIVE AND THE BOARD FILLS OUT THE BALLOT BASED ON THE DIRECTION OF THE MEMBER.

Our Board is of the opinion that when someone provides a directed proxy that they have waived their secret ballot. This is because the proxy is open for inspection by any member.

TIM

Could you see the situatuion where there are less votes then there were ballots given out and would you consider such election valid?

Example. I check in and I am given a ballot, proxy holder or not but the process is slow and boring so I leave before voting.

Now if 200 check in, including proxies, and 201 votes are cast, there is an issue.....LOL

Thanks

John,

Wouldn't the designated alternative be a proxy?

Granted, SECTION 33-31-724 of SC Nonprofit corporation act defers to the governing documents concerning proxies. However, based on the language you provided, I think an argument could be made that voting through a designated alternative is the same as voting by proxy.

I think you might have some language issues in your documents.

Tim